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Southwest Airlines' September Traffic Up, Load Factor Down

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Southwest Airlines Co. (LUV - Free Report) has reported traffic figures for September. Traffic (measured in revenue passenger miles or RPMs) rose 5.3% to around 9.99 billion, while capacity or available seat miles (ASMs) expanded 6.8% to 12.41 billion.

Load factor (percentage of seats filled by passengers) contracted 120 basis points (bps) to 80.5% in the month as traffic growth was outpaced by capacity expansion. Meanwhile, passenger count grew 4.8% to 12.5 million.

In the first nine months of 2018, Southwest Airlines witnessed a 2.8% rise in RPMs to 99.61 billion. Also, ASMs inched up 3% to 119.43 billion. As a result, load factor slid 10 bps to 83.4%. However, passenger count increased 4% to 121.9 million in the period.


 

With the earnings season approaching, let’s take a look at some of Southwest Airlines’ projections for third-quarter 2018, set to be released on Oct 25.

The airline anticipates ASM to rise in the range of 3.5-4%, while unit costs (CASM) — excluding fuel and oil expenses and profit-sharing expenses (including 0.5 to 1 point year-over-year adversity from the cancellations) — are estimated to increase between 3% and 3.5%. Additionally, unit revenues (RASM) are expected to improve 1-1.5% year over year. Also, fuel costs are expected at $2.25 per gallon in the quarter.

Zacks Rank & Other Key Picks

Southwest Airlines carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the broader Transportation sector are Spirit Airlines, Inc. (SAVE - Free Report) , Trinity Industries, Inc. (TRN - Free Report) and Werner Enterprises, Inc. (WERN - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Spirit and Trinity have rallied more than 25% and 12%, respectively, in a year.  

Werner Enterprises has an impressive earnings history, having outperformed the Zacks Consensus Estimate in three of the preceding four quarters, with an average beat of 7.3%.

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